(The Center Square) — New York’s local property taxes will be capped at 2% next year because of the lingering impact of high inflation, according to the state comptroller’s office.
A report issued by Comptroller Tom DiNapoli said the tax cap that limits property tax levy growth to 2% or the rate of inflation, whichever is less, has been triggered for the second year in a row. It will be the sixth time the tax cap has been triggered since it was implemented in 2012, he said.
DiNapoli said his office’s inflation factor calculation of 7.17% for 2023 was the highest level since 2012, and more than triple the 2.3% inflation factor from the prior year.
He said county and local governments are “facing economic challenges” that will “likely drive costs higher than expected or planned, making it harder to adhere to the tax cap as they prepare their budgets for 2023.”
“Although the rate of inflation has begun to decrease, it still poses a challenge for local governments and their budgets,” DiNapoli said in a statement. “As local governments spend down their one-time federal pandemic assistance, officials will need to carefully develop and balance their budgets for the coming year.”
The property tax cap impacts local governments using calendar-based fiscal years, which includes counties, towns, fire districts, 44 cities and 13 villages, according to DiNapoli’s office.
It also applies to property taxes imposed by special districts created to fund fire departments, public libraries, sewer and water systems and other municipal purposes.
Local governments are authorized under the law to override the cap, and school districts can bypass the cap with a 60% supermajority vote.
Last year, the New York State School Boards Association and the Association of School Business Officials pushed lawmakers to approve a proposal to change the formula to make the annual cap hike greater than 2% or the rate of inflation. But the proposal failed to win traction amid pushback from fiscal watchdog groups.
Supporters of the cap say it has saved New York homeowners billions of dollars in property taxes over the past decade, helping to reduce the overall financial burden in a state with some of the nation’s highest taxes.
New York has the fifth highest burden for property taxes, which account for an estimated 4.36% of personal income, according to a recent report by the personal finance website Wallethub.
The state also has the nation’s highest individual income tax burden, accounting for 4.72% of personal income, WalletHub said.
Tax experts say states like New York with higher tax burdens are seeing a flight of individuals leaving for states with lower tax burdens.
